How will Brexit Affect the UK Financial Market?
Will the UK lose its financial standing once it leaves the European Union?
This is a question that is currently on the minds of politicians, businesses and employees both inside and outside of the UK.
Businesses, looking on from the outside, will also be keen to understand what it will mean for their investments.
While no-one currently has the answer they are looking form, it pays for all concerned to consider the ways in which Brexit could affect the financial market, at least then, contingency plans can be made.
The first thing to note is that there has been increasing talk of preparations being made for ‘no deal’ when it comes to Brexit. While some feel this is a negotiating tactic on the British side to try to convince the EU that we could walk away from talks if progress isn’t made – others have raised concerns that this is apparently being considered.
The impact of Brexit so far
• Since the referendum in June 2016, UK GDP growth has fallen well behind the OECD and EU average.
• While the FTSE 100 and FTSE 250 have grown since the summer of 2016 – their performance is skewed by the proportion of overseas firms listed. When looking solely at UK-focused stocks, these can be seen to have underperformed significantly by comparison.
• Labour productivity has fallen even further.
• Inflation has risen and reduced ‘real incomes’.
• The fall in the pound after the vote has not yet boosted exports.
• Many of the least well-off parts of the UK rely heaviest on EU money – which serves to highlight the over-reliance on London.
Many feel the sluggish GDP, UK stock performance, labour productivity, inflation, weak pound and London reliance will only be exacerbated when the UK finally leaves the EU in 2019.
5 Ways UK businesses can cope with Brexit:
1. Keep calm and hold steady
2. Remember the UK labour market is strong
3. Protect the UK employer brand
4. Overcome the great divide
5. Look after your people
The process to exit the EU will take time and change will be very gradual — until it is not. It is of course easier to adapt if you are smaller and agile. And for now, the UK labor market remains one of the strongest in Europe.
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